Tehran announced its intention to operate the new Iranian oil refinery by next year (2024), in light of a severe crisis hitting the country due to its inability to meet the growing demand for gasoline.
The company responsible for building the “Mehre Al-Khaleej” refinery stated that it is scheduled to be launched with about 120,000 barrels per day of processing capacity in the new Iranian year 1403, which will begin in March 2024, according to information seen by the specialized energy platform, quoting the “Press” platform. Press TV.
Iran currently produces approximately 105 million liters of petrol per day, leaving it with an estimated 5 million liter shortfall to meet the record daily demand reported on busy travel days in recent months.
Details of the Iranian oil refinery
The Mehr al-Khaleej refinery is being built near the Najm al-Khaleej refinery, which has a capacity of 360,000 barrels per day, and operates on gas supplies from the South Pars field, which is the largest gas field in the world located on the maritime border between Iran and Qatar in the Persian Gulf.
The official at Khatam al-Anbiya construction headquarters, Mostafa Shaheer, stated that the launch of the Mehr al-Khaleej refinery will cover the growing gap between supply and demand for gasoline in Iran.
He said – on the sidelines of the Iran Oil Exhibition -: “The launch of this refinery is expected to add 13 million liters of gasoline, 3 million liters of diesel and one million liters of kerosene to the country’s (daily) production capacity.”
It is noteworthy that the headquarters of Khatam Al-Mursalin is an Iranian engineering company, run by officials of the Iranian Revolutionary Guard, and was established during the second Gulf War, and is concerned with construction work, reconstruction, and strategic projects in the country.
Iranian fuel smuggling
In light of this violent crisis, the extremely cheap prices of petrol and diesel have led to a significant increase in fuel smuggling across the Iranian borders in recent months; This forced the country to resume limited gasoline imports from countries like Russia.
Road fuel smuggling out of the country has become an increasingly difficult issue for Iran to manage, especially as it faces an ever-increasing demand for fuel.
Iranian diesel demand is currently around 528,000 bpd, according to the state-owned National Iranian Oil Refining and Distribution Company, but it estimates that actual domestic consumption is unlikely to exceed 470,000 bpd.
This indicates a gap of approximately 58,000 barrels per day between diesel distribution and its actual consumption, which is about 8% of Iran’s total diesel production of 690,000 barrels per day, according to Argus Media.
Fuel smuggling in Iran is encouraged by heavy fuel subsidies that Tehran continues to provide to domestic consumers, making diesel and petrol prices in Iran among the lowest in the world.
One liter of diesel currently sells for between 3,000 and 6,000 Iranian rials (between $0.07 and $0.14/litre) in Iran, much less than $1/litre or higher in Pakistan or Afghanistan, and petrol sells for between $0.03 and $0.06. dollars / liter, which is also much lower than prices in neighboring countries.
Previous attempts by the government to raise road fuel prices have led to nationwide protests, leaving the government in a vicious circle, limiting its efforts and willingness to eliminate subsidies altogether.
Fears of low reserves
Iran has had to look for ways to increase and upgrade its refining capacity, spurred by the rapid demand for diesel and gasoline, exacerbated by smuggling.
Despite the fact that there are 10 operating refineries that can handle 2.29 million barrels per day of crude and condensate, the current administration has announced plans to build new facilities, but these are likely to take some time.
In the shorter term, capacity and production growth will be limited to upgrades to existing refineries, which have also been hampered by Western sanctions.
At the same time, the increasing demand for gasoline has prompted existing refineries to operate at full capacity, leaving fewer possibilities for outages, according to Argos Media.
In March, government officials raised concerns that strategic gasoline reserves had fallen to extremely low levels, covering just 5 days of the country’s consumption.
This came as Iran’s demand for gasoline rose to an average of 657,000 bpd in the most recent Iranian year that ended on March 20, just 66,000 bpd below Iran’s overall gasoline production levels.
The state said that it had postponed “major refinery repairs” until next year, so that the refineries would operate at their maximum capacity at the present time, although it did not specify which refineries were affected.
The growth of Iranian oil exports
In another context, Iranian Oil Minister Javad Oji said that Iranian oil exports have witnessed double growth since President Ibrahim Raisi took office in August 2021, despite the “harsh” sanctions imposed on Tehran.
Javad Ochi made the remarks in a speech at the opening ceremony of the 27th Iran International Oil, Gas, Refining and Petrochemical Exhibition, also known as Iran Oil Show 2023, according to the Shana news agency of Iran’s Oil Ministry.
The minister indicated that despite the sanctions, Iran has so far set records in the production and export of crude oil, condensate, petroleum products and petrochemicals, according to information monitored by the specialized energy platform, quoting Xinhua news agency.
According to the minister, Iran has one of the largest oil and gas reserves in the world combined, which puts the country’s recoverable oil reserves at 154 billion barrels, and gas reserves at about 33 trillion cubic meters.
Oji explained that the country is currently producing 3 million barrels of oil per day, a daily amount of one billion cubic meters of natural gas, and its daily refining capacity is 2.4 million barrels.
He estimated Iran’s annual petrochemical production capacity at 95 million tons, saying that the Iranian administration has adopted a set of measures to prevent “harsh” sanctions from depriving the country of developing its oil and gas industry.
Ochi expressed Iran’s readiness to cooperate with all domestic and foreign investors, saying that the country has identified projects worth nearly 160 billion euros in the exploration, production and refining sectors of the oil industry for investments.
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